An opportunity to exceed the state’s maximum sales tax rate and the looming threat of budget shortfalls prompted the Long Beach City Council in December to fast-track a sales tax hike worth $24 million annually. But a question now remains over whether it was legal.
A local government reform group says no, alleging in a Feb. 6 lawsuit against the city that the move was “unconstitutional,” as it was not included in the ballot language that voters approved.
The lawsuit centers around Long Beach Measure A, a local sales and use tax passed in 2016 and extended in 2020. The measure imposed a 0.75% sales tax that was scheduled to rise to 1% in October 2027.
But at a Dec. 12 special session, the Long Beach City Council voted 6-0 to amend that language, allowing the full 1% tax to be collected two years earlier than originally contemplated. The move will put Long Beach’s total sales tax rate at 10.75% starting in April 2025, a percentage that’s tied for the highest in the state.
The lawsuit contends this is a violation of Proposition 218, which prohibits a local agency from imposing, extending or increasing any tax without voter approval. Any changes to the rate schedule must be decided by voters in a new referendum, said Ian Patton with the Long Beach Reform Coalition, which filed the suit.
“If you do change anything that was voted on as a ballot measure, it can only be another ballot measure in the future that changes it,” Patton said.
He and others are seeking a court order to invalidate the tax increase, declare it “unconstitutional and illegal” and demand the city cease collections.
City officials declined to comment on the lawsuit directly, but they previously addressed many of Patton’s arguments at a Dec. 12 City Council meeting where Councilmember Kristina Duggan also questioned whether it was legal to raise the tax before its scheduled date.
The city’s top attorney and financial officer assured her that the change was backed by legal precedent and reflective of what voters ultimately wanted.
California normally caps local sales taxes at 10.25%. If Measure A immediately collected its full 1%, it would’ve exceeded that theoretical max. It was scheduled to collect only 0.75% until Measure H, a countywide 0.25% tax, ended in 2027. State tax law gives precedent to larger government bodies, meaning Long Beach had to lower its own tax rate in order to accommodate the county tax through its end date.
But that changed in November 2024 with the passage of a higher, 0.5% countywide tax that replaced Measure H. That new tax had a specific carve-out created in 2023 by the California Legislature that let it surpass the state cap on the condition it goes toward homelessness and housing programs.
With Measure H dispatched early and the new county tax exempt from the cap, Long Beach saw an opening to increase Measure A’s rate earlier than originally planned — but it required action from the City Council.
Because they didn’t originally expect Measure H to be repealed early, Long Beach Measure A set 2027 as the date for the tax increase, according to City Attorney Dawn McIntosh.
But the exact language on the ballot is “not the only thing that matters under the law,” McIntosh said. Ballot measures are limited in their description to 75 words and courts have routinely recognized that you can’t fit the scope of the measure into its summary, she explained.
Regardless of the timing, City Manager Tom Modica emphasized the “crux of Measure A” was that voters wanted a 1% tax in Long Beach.
Mayor Rex Richardson argued that it was crucial to implement the tax increase now because it would bring the city $60 million it wouldn’t have otherwise.
“If we do not do this today, then we essentially forfeit up to $60 million dollars in revenue to services in our community, …” Richardson said at the December meeting.
It also comes at a critical time for the city, which needs to shore up an expected $30 million deficit in the next fiscal year. And more budget woes are expected, as the city forecasts an $87 million structural deficit through 2030 due to declining oil revenues.
With that in mind, officials said there would be a high cost for not approving the schedule change, citing past deficits that forced the layoff of 200 police officers and the closure of fire stations.
“If we were to take $30 million out of all the rest of the departments, you would see incredible pain for things that we know our community wants,” Modica said. “Those would be the tough choices we’d present to the council.”
Patton, for his part, said leaving the sales tax in place would cause damage of its own, arguing it weakens local businesses and encourages shoppers to purchase goods elsewhere, like nearby Signal Hill and parts of Orange County. Signal Hill has a cumulative tax rate of 10.25% while cities in Orange County range between 7.75% and 9.25%.
“We want the public to be aware that their City Hall is not treating them on a level basis, and unfortunately, it takes going to court to force them just to follow the law for something as basic as the sales tax, which affects everybody, every last person in the city,” Patton said.
Editor’s note: This article was updated to more accurately describe the City Council’s vote and the mission of the Long Beach Reform Coalition.